Correlation Between Solana and OKT Chain

Can any of the company-specific risk be diversified away by investing in both Solana and OKT Chain at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Solana and OKT Chain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solana and OKT Chain, you can compare the effects of market volatilities on Solana and OKT Chain and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Solana with a short position of OKT Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solana and OKT Chain.

Diversification Opportunities for Solana and OKT Chain

0.83

Correlation Coefficient

Solana  OKT Chain

Very poor diversification

The 3 months correlation between Solana and OKT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Solana and OKT Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKT Chain and Solana is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Solana are associated (or correlated) with OKT Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OKT Chain has no effect on the direction of Solana i.e., Solana and OKT Chain go up and down completely randomly.

Pair Corralation between Solana and OKT Chain

Assuming the 90 days trading horizon Solana is expected to generate 1.61 times less return on investment than OKT Chain. But when comparing it to its historical volatility, Solana is 3.25 times less risky than OKT Chain. It trades about 0.34 of its potential returns per unit of risk. OKT Chain is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  707.00  in OKT Chain on August 30, 2024 and sell it today you would earn a total of  290.00  from holding OKT Chain or generate 41.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Solana  vs.  OKT Chain

Solana

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Solana exhibited solid returns over the last few months and may actually be approaching a breakup point.

OKT Chain

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OKT Chain are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, OKT Chain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solana and OKT Chain

The main advantage of trading using opposite Solana and OKT Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana position performs unexpectedly, OKT Chain can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in OKT Chain will offset losses from the drop in OKT Chain's long position.

The idea behind Solana and OKT Chain pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.